Credit impacts so many things in life,…more than you may realize. Unfortunately, it can have a compounding effect. Below are 5 major side of effects of bad credit.
1. Auto Insurance Rates
This is a little known fact that your credit score can affect your auto insurance rates. Insurance companies have learned over the years that individuals with lower credit scores are more likely to file insurance claims. As a result, they may apply higher premiums to low credit score customers since those customers represent a higher risk.
2. Home Owner’s Insurance Rates
For the same reason that auto insurance rates are higher for customers with low credit scores, so are home owner’s insurance rates. Unlike auto insurance, home owner’s insurance companies will also look at your past record of filing insurance claims against your home owner’s policy. You can even be denied coverage based on those past claims.
3. Employment Opportunities
Employers are starting to look at credit scores when evaluating candidates. The modern approach to hiring goes beyond your resume and skill set. Employers now try and gauge what type of person you are. This can include your social media activity and your credit score.
4. Apartment Rentals
Tenants who fail to pay rent can be a costly problem for landlords. Many will ask for credit reports to determine how likely you are to fulfill your financial obligations to them. Landlords often rely on credit scores to provide objective information.
5. Higher Interest Rates
It may seem a bit unfair that individuals with lower credit scores pay higher interest rates. People with low scores probably need the benefit of low interest rates more than others. However, creditors must mitigate their risk. Otherwise, they may not be willing to extend credit to consumers with low credit scores.
Other Side Effects of Bad Credit
Bad credit can really limit the opportunities available to you. It is best not to wait for an important life invent, such as buying a house or applying for a new job, to find out that your credit score is too low. If you have issues in your credit report or need help improving your score, contact FIT Credit for a free consultation.